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The Government Response on the Taylor Review – Good Work?

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Published: 22 February 2018

Following substantial delay, the Government has now published its response to the Taylor Review, which was commissioned in response to issues arising out of the so-called “gig economy”, and a number of high profile Employment Tribunal cases against the likes of Uber and Deliveroo in which individuals challenged their classification as contractors rather than workers or employees, and sought access to various employment rights.

Employment status is a complex area of law, and much of the case law on this topic predates the evolution of the gig economy. Many of the recommendations in the Taylor Review therefore focused on clarifying the law governing employment status, for example by incorporating key criteria in legislation which would allows individuals and businesses to more easily identify worker or employment status. In recognition of the changes in how individuals are employed, it also recommended that personal service should no longer be a crucial factor, to avoid businesses resisting worker status simply because of a clause in the contract notionally giving the right to send a substitute to provide the service. It also recommended that various rights should be extended to workers, such as the right to Statutory Sick Pay, the right to be given a written statement of terms, and the right after 12 months for agency workers to request a contract of employment and for zero hours workers to request a contract with guaranteed hours which better reflects the hours they actually work.

Having reviewed the recommendations set out in the Taylor Review, the Government has launched four consultations on how to best implement some of the recommendations set out in the review:

• A consultation on employment status, which asks for submissions on which factors should be taken into account, and what weight should be attached to them, in assessing status. It also seeks submissions on how to assess what is “working time” in more flexible jobs, and whether there should be an alignment between tax treatment and employment rights.

• A consultation on increasing transparency in the labour market, in which the Government consults on what information should be included in the statement of terms and conditions which employees have a right to receive in relation to their work, and which they have committed to extending to workers. It also seeks views on whether the reference period for holiday pay (where workers who work irregular hours receive the average pay for the weeks preceding their holidays during their leave) should be changed from 12 weeks to 52 weeks, and on the proposal to introduce a right to request a more “stable” contract for all employees.

• A consultation on the recommendations focused on agency workers, in particular on providing ‘key facts’ such as who is responsible for paying the agency worker, extending the remit of the Employment Agency Standards inspectorate to cover certain umbrella companies and intermediaries, and the abolition of the so-called “Swedish Derogation”, which allows employers to effectively pay agency workers less than permanent employees as long as they are paid between assignments, and which has been criticised for alleged abuse by some employers.

• A consultation on enforcement of employment rights, which is seeking submissions on barriers to workers receiving pay during holidays or sickness absence, the proposals to simplify the enforcement process for employment tribunal awards, including the establishment of a naming scheme for employers who do not pay penalties, and the introduction of financial penalties for repeat or aggravated breaches.

Other commitments in the Government’s response are to give workers the right to receive a payslip, to produce an online tool to help individuals and businesses more easily define employment status, and a future consultation as part of its strategy on health, work and disability to take forward the recommendation to make receipt of statutory sick pay a right comparable to the national minimum wage and extend it to workers.

It remains to be seen to what extent the measures identified will be implemented following the consultations. The Government emphasises repeatedly in its response that for many people atypical working works well, and that employers who abuse the system are the minority. However, it is clear that more clarity is needed especially in relation to the vexed question of employment status in order to be able to assess what rights individuals have, and also who is responsible for the taxes they pay. It will be interesting to see the responses that are received, and what specific proposals may flow from them. This week in Prime Minister’s Question Time Theresa May claimed, with reference to action on the Taylor report, that she wanted to enhance workers’ rights, not just protect them, but with the issues kicked into the long grass by way of consultations and with Brexit issues taking up so much of the Government and Parliament’s time it seems unlikely that we will see any major reform in the short term.

If you have any queries about the gig economy or any of the issues raised above, please contact a member of the Stronachs Employment Team.